US and Israel fail to end settlement dispute in last-minute talks

America and Israel have failed to heal their deepest dispute in decades as a two-day visit by Israeli Prime Minister Benjamin Netanyahu ended without resolving a rift over new Israeli settlements planned in east Jerusalem.

Israel's Prime Minister Netanyahu had extended his stay in the US to try to resolve the disputePhoto: REUTERS

7:00AM GMT 25 Mar 2010

American officials said last-minute talks between Mr Netanyahu and George Mitchell, the US Mideast peace envoy, had not ended tensions over Israeli construction in the part of Jerusalem that Palestinians want to be a capital of a separate state.

Officials from both countries said that the meeting was aimed at getting Israeli-Palestinian peace talks back on track. Mr Netanyahu had extended his stay by hours to work on a deal, but the talks ended at about 8pm without any announcements, one official said.

The two sides had hoped to come up with mutually acceptable ideas to improve an atmosphere poisoned by announcements of the new Jewish housing projects. An Israeli official said Israel wanted to see talks with the Palestinians resume quickly. The evening talks were intended to promote that goal, the official said.

Mr Netanyahu twice pushed back his departure from Washington after talks with President Barack Obama, Vice President Joe Biden and Secretary of State Hillary Rodham Clinton failed to reach consensus on what Israel could do to repair damage caused by the housing announcements.

During his visit, "the US made clear it is looking for steps to increase confidence and show commitment to the process," said Mark Toner, the deputy State Department spokesman.

Earlier, the Obama administration had challenged Israel to explain yet another announced plan to expand Jewish housing in east Jerusalem, the same issue that soured US-Israeli relations ahead of Mr Netanyahu's three-day visit to Washington this week.

Palestinians claim east Jerusalem as the capital of a future independent state, and the United States sees continued Israeli building there as a provocation that makes peace negotiations harder.

But Mr Netanyahu offered no concessions during his visit on an earlier plan to build 1,600 homes for Jews in the disputed part of the city.